Do or Die

The following is commentary that originally appeared at Treasure
Chests for the benefit of subscribers on Monday, August 15, 2016.

The laws of the jungle are becoming important again as the life cycle of humanity
continues to turn. Increasingly, it's survival of the fittest for both the
have-nots and haves alike, whether they choose to realize this or not. In the
jungle, it's 'do or die' – the laws of natural selection. The weak and less
endowed must stay ahead of the strong or be eaten – and they know it. For some
time now however, increasing numbers of human beings have become desensitized
to rules of Mother Nature due to technological innovation that has made life
'easy' for the masses like never before. And we are still in this false bubble,
however the predators continue take
prey.

Times are getting tough again however, where the life cycle of benefits associated
with technological innovation (money printing included) are being challenged,
now forcing increasing numbers back into the jungle. More and more people are
beginning to realize we are returning to the ways of the jungle as they are
being disenfranchised from easy
money existence – where only the top 1% and their dogs (government bureaucrats,
private sector agents, etc.) are still feeling the benefit of sterilized
money printing. This is understandable of course, because consistent with
the laws of the jungle, if you threaten the dominant animals, they will eat
you, even their own.

So this is essentially what is happening out there these days, where whether
you know it yet or not – if you want to survive – the idea is not to be eaten.
In the West, and in terms of 'technological innovation' as it applies to the
financial markets, which in reality is more 'desperate intervention' than 'basic
innovation' (the basic innovation was money debasement itself, discovered long
ago, with all new variations attempts at deception), increasingly complex financial
engineering has been the status quo's modus operandi to continue the pilfering
of the masses, with negative interest rate policy (NIRP)
the latest example. Again however, as always, the question is, 'how long will
this variation of sterilized currency debasement last'; and, 'if it fails,
would this be the straw that breaks the camel's back, propelling modern men
back towards our more primitive origins'?

The onset of World War III (WWIII) would answer these questions readily, as
competition for scarce resources intensifies into a truly 'dog eat dog' world.
And if Hillary gets into the White House this fall, we should see proliferation
in this regard quickly not long afterwards, as she endeavors to reward her neocon
supporters, defense
contractors, etc. – the US war machine. This is of course why Russia and
China have been scrambling
to protect themselves from these animals, because they are so 'out of it'
now they actually think they can profit from some kind of sterilized war (no
nukes?), like NIRP (economic war imposed on both foreign and domestic targets),
with the delusion factor now running so high – if the public were not so high
(distracted with drugs, money, whatever) – they might be able to see clearly
– making them justifiably terrified.

So again, as the title of this piece suggests, we had better 'do something'
about these nut bars or it could be war quite soon – a war we cannot
win. Trump is putting himself out there as the solution
to this situation, however as the alluded to above, what happens when the
competition for scarce resources intensifies globally anyway? You should know
this is China's grand
plan long-term, better know as the Silk Road. They intend to overtake America
in every way (military, currency,
etc.), which is understandable because it's natural – the laws of the jungle
at work. That said, with China's aspirations perhaps not so clandestine, still,
what the neocons
have planned is far worse because they are fighting the 'natural order'
– because The Banana Republic of America is
broke.

Such thought is evidenced in the fact the global decentralization
process continues to
accelerate. Because when people are facing increasing adversity, which
is the case now evidenced in declining
economies, there first reaction is to protect
themselves – or 'pull their horns in' – especially once people figure
out the central planners that were supposed to be taking care of them are
just in it for
themselves. What's more, the corruption is
pervasive and everybody
knows it. All over the world, with the benefits of money printing for
the masses now fading, people can see embedded bureaucrats have only their
own best interests at heart, and are systematically working to detach themselves
from present hi-level hierarchies, including The American Empire and European
Union, better know as 'The West'. (i.e. it's not Putin we need protection
from, it's our own neo-fascist
governments.)

But the spin masters of the West will not go quietly however – I can assure
you of that. The police state, surveillance state – whatever you want to call
out of control fascist bureaucrats hell bent on stealing the public blind –
they like life just fine the way it is, and are more than willing to take yours
to keep it. Know why police have immunity in shootings, fatal and not? Because
the oligarchs and bureaucrats need their dogs to protect them from an increasingly
angry public. The straw that will break the camel's back in terms of 'blow
back' associated with this moving forward will be decided in the election.
If Hillary is elected and America goes to war, with the draft (including women)
invoked, just like Vietnam, lookout, because if you thought the protests of
the 60's and 70's were something – 'you
ain't seen nothing yet'.

Young people today are more aware of the fact war is just a tool of the 'moneyed
interests', and they will rebel. Emotions are going to explode on this
issue because youthful bubbles of 'entitlement' and 'social media distraction'
will quickly disappear when millennials realize the 'greedy old bastards'
want us to die so the stock market doesn't crash. Again, if Trump gets in
and starts cutting
taxes like he's proposing, stocks could see quite a surge going into
next year without going to war – so you young voters better get off your
butts in November. For traders, this is of course the most important thing
you can watch in my opinion, because if Trump gets in, stocks could soar,
temporary as any such rally might be. Because Trump will not be able to cut
taxes with national debt levels so
high, especially if interest rates begin to rise in earnest, which could
be coming sooner
than most think. (See Figure 1)

Figure 1

So what are Trumps chances of getting in, with the status quo hell bent on keeping
him out? What's been happening is odds are improving the more desperate
the status quo gets. Because like the Brexit vote, the 'plebs are pissed',
and they are voting to kick the establishment in the teeth. And this won't
change no matter what happens between now and November. Stocks crash – it
won't matter because increasing
numbers of people voting for Trump are being disenfranchised every day.
In fact, a stock market crash right in front of the election would likely
do nothing but help Trump because it would look like the status quo is out
of favor and losing its grip. What's more, if people were actually listening
to what Hillary is saying these days, promising to raise
taxes on the middle class, one would think she would not be ahead
in the poles, and perhaps in reality she's not. Perhaps the poles are
a fiction, just like the stock market. (See Figure 2)

Figure 2

Looking at 'true sentiment' conditions, as measured by the key index/ETF
open interest put/call ratios we follow (see
here), with updated charts viewed
here, we see a picture of complacency right in front of options expiry
this coming Friday, something that historically is an anomaly. How can this
be? Answer: It's the 'Hillary Effect'. The status quo boys simply will not
allow stocks to go down in front of the election if they can help it – because
this helps Hillary – so prop desks are on high alert. The question then arises,
'can they keep it up right into November'? These are the most desperate people
in the world, so it's definitely possible if they can 'stuff Trump', where
a 'full
court press' in this regard is underway as we speak. As mentioned previously,
only if it becomes clear prior to the election will the rats jump ship prematurely.
This could happen at debate time, the first coming on (Monday) September 26.
Trump is the superior debater – so this could be interesting. (See Figure 3)

Figure 3

And then there's Julian Assange, who is doing his
best to destroy the status quo / Clinton machine, who could release those
33,000 lost emails that mysteriously disappeared around this time, that won't
help matters for the Hillary camp as well. Thing is, and something most 'crazed
traders' are not aware of these days, is if the broads take a tumble at some
point in the not too distant future, so will precious metal shares if the
above chart maintains any predictive value – showing an intense positive
correlation between stocks and gold stocks. Take a good look, because again,
contrary to belief for most, this is the case. This of course solves the
question of what will happen when the Dow / XAU (Philadelphia Gold & Silver
Index) Ratio (seen
here in Figure 2) finally bottoms to correct higher as well – meaning
both stocks and precious metal shares can be expected to fall whenever these
days arrive.

Many participants in precious metal shares currently think they are bullet
proof, and that nothing bad could happen to them. Funny thing is, the reason
they think this is because of the price action and relentless rally since January;
and the reason for this is the 'wall of worry' they have been climbing off
the hedgers. So, yet again, we have extreme irony in extreme conditions, that
will likely bring an extreme correction once speculators lose their penchant
to hedge their exposures. I don't know when this will happen, but rest assured
it will arrive at some point, likely when least expected. (i.e. in seasonal
strength period, starting in September?)

So I think the S&P 500 (SPX) can still easily vex higher trajectories
just above 2200 matched against the SPX / VIX Ratio hitting long-term sinusoidal
resonance based resistance seen
here in Figure 1, at approximately 200. Such an occurrence would correspond
to the VIX vexing the round number at 10. If this happens in front of the election,
even if as early as this coming week, short sellers should look at this a possible
'an opportunity' in my opinion, however stringent position limits should be
employed given if nothing happens to knock Hillary off her quest for the White
House running into November, prices could remain buoyant for some time yet.

And again, in terms of precious metal shares, sentiment wise, with all the
hedging still going on in the shares (see above), it's difficult envisioning
anything too bad happening to them between now and expiry on Friday. After
this however, starting next week, it could be a different story depending on
post expiry distributions (ratios), macro-factors, etc. We will be sure to
have out monthly 'true sentiment' study out promptly next Wednesday to keep
you abreast of any significant changes. If I had to guess right now, complacency
should continue to grow, as is the case in the futures market, which are at
records.

Again, most traders don't realize there's a positive correlation between the
broads and precious metal shares, making for a dangerous situation not just
for the former group, but the latter as well. That means this is not a time
to be bold no matter how easy it appears to make money right now.

Caution is the word until we have a reasonable correction in the sector then;
especially in the juniors, considering the CDNX has
not had a decent pullback since last year – and because it has a very tight
relationship with the broad measures of wealth. (i.e. liquidity.)

So be careful going into crash time – September and October – as conditions
are ripe for some unexpected action this year.

Remember – most think the government won't let anything nasty happen going
into the election.

Treasure Chests is a market timing service specializing
in value-based position trading in the precious metals and equity markets with
an orientation geared to identifying intermediate-term swing trading opportunities.
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